\section{Standards, Ecosystems and Open Innovation}
\label{sec:ecosystems}
Standards play a vital role inside business ecosystems from legal as well as social perspectives beside technical perspectives. It is important for us to understand the concept of an ecosystem to make our discussion about the topic more precise. This section reveals the concept of business ecosystems. Furthermore companies form an ecosystem to develop an open innovation strategy, and so we are also introducing the concept of innovation and open innovation in this section.

\subsection{Business Ecosystem}
According to James F. Moore ``Business Ecosystem'' is \textit{``an economic community supported by a foundation of interacting organizations and individuals --. This economic community produces goods and services of value to customers, who are themselves member of the ecosystem. The member organisms also include suppliers, lead producers, competitors, and other stakeholders.''} as quoted in \citep[pp. 57]{PELTONIEMI}. Furthermore in his paper \textit{``Predators and Prey: A new Ecology of Competition''} Moore divided the life-cycle of a business ecosystem into four stages. These stages can work as a useful analytical framework while making strategies as one can have the overview of what stage an organization is going through \citep{Moore}:

\begin{description}

\item[Birth or Vision Stage:] In this stage one should identify particular seed innovation that will create radically better products and services. Direct and complementary capabilities including technologies, customers and customer segments, markets and regulatory regimes.

\item[Expansion Stage:] In this stage the ecosystem broadens its scope and consumes resources with the goal of market domination.

\item[Authority or Leadership:] This is a very important stage where an eco{\-}system reaches stability and high profitability. Leading organizations must maintain and strengthen their ability to shape future direction and investment. According to Moore leading organizations must maintain bargaining power over the members of the ecosystem.

\item[Death or Renewal Stage:] The final stage of an ecosystem is generally caused by the threat of a rising new ecosystems. The challenge here is to provide continuous products, services and also improve the processes. 

\end{description}

\noindent \textit{``A business ecosystem [is] a network of suppliers and customers around a core technology [platform], who depend on each other for their success and survival''} \citep[p.23]{HARTIGH} It seems impossible for firms or companies to compete on their own in this environment of growing technological networks. The competition is rather seen between large coalitions or networks working around common technological platform. \bigskip

\noindent In general, the components of business ecosystem can be seen as integrated in two ways:

\textbf{Vertical Integration:}  When the companies producing different products are united through a common owner to produce a valuable product or service then it is vertical integration. The most popular vertically integrated industries are Apple Inc. and Blackberry/RIM. Vertical integration is more common in production.

\textbf{Horizontal Integration:}  When the companies are producing similar goods and at the same stage of production are merged within the same industry then we are speaking of horizontal integration. Horizontal integration is common in marketing. One of the reason why companies form horizontal integrations is because they want to create a sort of monopoly in the market. \bigskip

\subsubsection{General Understanding about Innovation and Open Innovation}

The term ``innovation'' has been very popular after the start of the information age. In the industrial age people used to talk more about invention.

Innovation has been serving as a key to success in a business. There are many strategies that can be followed and business models that can be implemented but before all of that the core thing that is required is an innovation. \bigskip

\noindent Joseph Schumpeter who has the reputation as ``prophet of innovation'' describes innovation with the concept of \textit{``new combination''}. He defines innovation as \citep[p. 142]{ALIN}:
\begin{enumerate}
\item  \textit{ ``The introduction of a new good- that is one with which consumers are not yet familiar- or a new quality of a good.
\item The introduction of new method of production that is one not yet tested by experience in the branch of manufacture concerned, which needs by no means founded upon a discovery scientifically new, and can also exist in a new way of handling a commodity commercially.
\item The opening of a new market, that is a market into which the particular branch of manufacture of the country in question has not previously entered, whether or not this market has existed before.
\item The conquest of a new source of supply or raw materials or half-manu{\-}factured goods, again irrespective of whether this source already exists or whether it has first to be created.
\item The carrying out of the new organization of any industry, like the creation of a monopoly position (for example through trustification) or the breaking up of a monopoly position.''}
\end{enumerate} \bigskip

\noindent According to Schumpeter innovation is the critical dimension of economic change. He argues that economic changes revolve around innovation, business activities and market power. He further argues that technological innovation often creates temporary monopolies, with abnormal profits that would soon be competed by rivals and imitators. He moreover says that these temporary monopolies are necessary to provide the incentive necessary for firms to develop new products and processes \citep{CARROLL}. \bigskip

\noindent Rogers define innovation as:

\begin{quote}

 \textit{``An innovation is an idea, practice, or object that is perceived as new by an individual or other unit of adoption.''} \citep{ROGERS}
 
 \end{quote}

\subsubsection{Types of innovation and ecosystems performance}

\noindent After having the brief knowledge about innovation it is further very important for us to have an understanding about different types of innovation and the roles they play. This will help us to understand the types of innovation used inside the Symbian ecosystem, knowledge behind it and  its impacts on competitors and customers. \bigskip

\noindent Schilling defines four dimensions most commonly used to differentiate innovation, and they are \citep{SCHILLING}:

	\paragraph{Product Innovation versus Process Innovation:} Product innovations are illustrated in the outputs of the company, its goods or services whereas process innovations are illustrated in the way a company conducts its business such as production technique or production of goods and services.
	\paragraph{Radical Innovation versus Incremental Innovation:} Radical innovation can be seen  as a combination of newness and a degree of differentness. A product or technology can be new to anyone and can be completely or marginally different from the existing product. The introduction of wifi technology can be seen as radical innovation whereas an incremental innovation is the minor development in the existing product or technology. Incremental innovation does not offer  completely new or different products. 
	\paragraph{Competence-Enhancing Innovation versus Competence-Destroy{\-}ing Innovation:} An innovation is known as competence enhancing if the new product is developed on the companies existing knowledge base. For example Intel's microprocessors. Oppositely,  an innovation is known as competence destroying if the new product or technology is not build on companies existing knowledge or leaves them obsolete.
	\paragraph{Architectural Innovation versus Component Innovation:} An innovation is considered as a component or modular innovation when the change  made in one or more components  does not affect the overall configuration of the system. Whereas, architectural innovation is the innovation which causes the change in the configuration of the system or the way components relate with each other without changing the components itself. \bigskip

\noindent As the demand of our research question it was important to grab some understanding of innovation. The most important part is to understand the term  \textit{``Open Innovation''} and the effect of open innovation in an ecosystem. \bigskip

\subsubsection{Open Innovation}

\noindent Chesbrough defines open innovation as 
\begin{quote}
 \textit{``[...] a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology. Open innovation combines internal and external ideas into architectures and systems whose requirements are defined by a business model.''} \citep{CHESBROUGH2}
\end{quote}

\noindent In 2006, Chesbrough redefined Open Innovation as 
\begin{quote}
 \textit{``[...] the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively. [This paradigm] assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as they look to advance their technology.''} \citep{CHESBROUGH2}
\end{quote}

\begin{figure}[H]
\begin{center}
\includegraphics[scale=0.90]{./Pictures/OpenInnovation.png}
\end{center}
\caption{Open Innovation by Chesbrough (2003)}
\label{fig:openinnovation}
\end{figure}

%http://www.openinnovation.eu/open-innovation/

\noindent West, Vanhaverbeke and Chesbrough discuss different offerings from open innovation as well as the further research on open innovation is needed.\bigskip

\subsubsection{Standards and Innovation} 

\noindent The debate on standardization and innovation seems as a never ending war. The reason behind this is that standards by definition can be seen as a factor that limits variety and complexity. But on the other hand, standards actually make innovation more disciplined. Empirical knowledge about standards and the available literature on innovation points towards the fact, that standards act as an important factor for new innovation to occur. Various authors have presented their ideas in different ways to explain: How does standards affect innovation? and Do standards promote or limit innovation? It is moreover important for us to discuss about this topic in our theory because our research question is based on these factors and the relation between them. \bigskip

\noindent Different authors discuss the balance between standardization and innovation.  According to G.M. Peter Swann, although standardization does slow down the activities but by doing so on the other hand it also builds an infrastructure to help trade and subsequent innovation \citep{SWANN}. Further in his paper  \textit{``The Economics of Standardization''} he writes

\begin{quote}
 \textit{``Standardization is not just about limiting variety by defining norms for given technologies in given markets. Standardization helps to achieve credibility, focus and critical mass in market for new technologies. Moreover, well-designed standards should be able to reduce undesirable outcomes.''} \citep[p.9]{SWANN}
\end{quote}

\noindent Similarly, King (2006) supports what Swann describes about \textit{``informing and constraining''}. Swan describes standards as a source of information. King gives his conclusion as

\begin{quote}
 \textit{``[...] [S]tandards inevitably constrain a firm's activities if they wish to receive the benefits that standardization brings. Finally, regulations may force firms to innovate and adapt their practices in order to comply with regulation, and in such circumstances firms are necessarily constrained by regulation. In essence, taking account of standards and regulations is part of the routine that successful firms follow.''} \citep[p.10]{SWANN}
\end{quote}   

\noindent Blind (2009) explains standards in an innovation are similar as catalyst in a chemical reaction which supports the reaction but remain unchanged itself by the fact of that reaction. He also illustrates the catalytic behavior of standards on innovation on three different areas as:

\begin{quote}
 \textit{``First, the standardisation process reduces the time to market of inventions, research results and innovative technologies. Second, standard themselves promote the diffusion of innovative products, which is most important for economic impact of innovation. A third more indirect, but important function of standards is that they level the playing field and therefore promote competition and consequently innovation. Fourth, compatibility standards are the basis for innovation in network industries.''} \citep[p.11]{SWANN}
\end{quote}  

\noindent Dominique Foray explains the concept of standards and innovation in his paper ``Standards and Innovation in Technological Dynamics''. He discusses about fast-changing economics and the need of standards and norms. He further explains that innovation brings change which is expensive. These expenses can be regained if the change is stable for long period of time. But when change is too fast, it becomes difficult to cover the expenses. The disadvantages caused by fast change are \citep{FORAY}:

\begin{itemize}

\item Innovation does not get enough time for diffusion in the market as they are replaced  quickly by new innovation.
\item Very fast innovation creates a wait-and-see nature among the buyers. 
\item The rate of knowledge depreciation accelerates.
\item The cost of training, adjustment and adaptation grows enormously. 

\end{itemize}

\noindent Foray concludes that standardization can help to reduce all the above mentioned negative effects caused due to fast-change. \textit{``Standardization intervenes [fast-change], making it possible to create temporary stability, ``transient lock-in,'' giving agents the possibility of coordinating their activities in a context of fast change.''} \citep{FORAY} He also adds standardization can be supportive for innovation but should be followed in an appropriate way. 

\subsection{Platform Strategies}

\noindent The start of the mobile phone industry started with the use of their own embedded system. It is difficult to define the exact time since when the platform strategy invoked into the mobile phone industry. But this is not that important for us. The more important part is to understand different platform strategies that are used by different mobile platforms.

\subsubsection{Proprietary platform strategies}
According to West \textit{``A proprietary platform consists of an architecture of related standards, controlled by one or more sponsoring firms.''} \citep{WEST}

He also adds that success of a platform cannot provide sufficient condition for profiting from proprietary technology innovation. Especially, when competing firms have the control of the different layers of the standards architecture \citep{WEST}. In the discussion about shifting from proprietary to open strategies, West explains, that mostly firms prefer to follow proprietary platform strategies as \textit{``they provide better barriers to imitation and better margins''} \citep[p. 1278]{WEST}.


\subsubsection{Open source platform strategies}
West defines characteristics of open source platform as the one that 
\begin{quote}
\textit{``rather than using formal IPR protection to set boundaries between vendors and their competitors and customers, open source enlists all as collaborators, maximizing adoption throughout the value chain but minimizing the options for appropriating rents from the software.''} \citep{WEST}
\end{quote}\bigskip

\noindent Varian and Shapiro explain the idea between choosing the open and closed system by saying:
\begin{quote}
\textit{``Which route is best, openness or control? The answer depends on whether you are strong enough to ignite positive feedback on your own. Strength in network markets is measured along three primary dimensions: existing market position, technical capabilities, and control of intellectual property such as patents and copyrights.''} \citep[p. 197]{SHAPIRO}
\end{quote}